MARKET REPORT - KUWAIT

Kuwait is one of the richest countries in the world in terms of its per capita income (approx. US$42,100/-).Its economy is oil dominated with official reserves of 102 billion barrels or almost 6% of the world reserves. Petroleum accounts for 50% of Kuwait’s GDP, 95% of export earnings, and 85% of government earnings.

Kuwait’s economy moved strongly from 2003-08 and witnessed highest ever growth in nominal GDP supported by strong oil demand, volume of oil exports and increased foreign investment. It was hard hit during 2009 due to the global crisis and oil market slump; however it managed to survive an economic crisis on the strength of continuous budget surpluses.

In 2010, Kuwait passed an economic development plan that pledges to spend up to $130 billion over five years to diversify the economy away from oil, and boost private sector participation in the economy, much of these funds yet have to be allocated.

During 2013 exports stood for US$112 billion and imports were US$24.42 billion with a budget surplus of 29.2 % of GDP. Kuwait’s main imports are: machinery, mechanical appliances, electrical equipment and electronics (24 percent of total imports); transport equipment (14 percent); base metals and articles thereof (12 percent); chemicals and related products (9 percent) and fruits / vegetables (6 percent).

Major Export partners are:

South Korea 16.1%, India 15.7%, Japan 13.4%, US 11.7%, China 9.2%, Singapore 4.2% (2013 est.)

Import Partners are:

US 11.8%, China 9.2%, Saudi Arabia 8.6%, Japan 8.2%, South Korea 6.9%, German 5.1%, India 4.6%, UAE 4.4% (2013 est.)

Kuwait’s main imports are processed food and agriculture products, beverages and tobacco, chemicals, machinery, vehicles, clothing and textile products. Kuwait does not implement Custom duties on food, agriculture items or essential consumer goods. A 4% general tariff is imposed on CIF value of goods. Hydrocarbons are subject to 100% duty and duty on cigarettes and tobacco is 75%. Protective tariff is imposed on some local products, however to qualify for protective tariff, WTO standards are applied.

Top 20 Imports of Kuwait from World

US$ Thousand

S. No. / Product Code / Product Label / Value in 2011 / Value in 2012 / Value in 2013
TOTAL / All products / 20,080,224 / 20,071,705 / 22,258,249
1 / '87 / Vehicles other than railway, tramway / 3,525,711 / 4,540,238 / 4,904,159
2 / '84 / Machinery, nuclear reactors, boilers, etc / 2,468,593 / 2,677,158 / 2,399,642
3 / '85 / Electrical, electronic equipment / 1,551,753 / 1,511,055 / 1,925,688
4 / '27 / Mineral fuels, oils, distillation products, etc / 944,444 / 720,242 / 1,074,180
5 / '73 / Articles of iron or steel / 1,121,668 / 1,046,487 / 1,037,322
6 / '88 / Aircraft, spacecraft, and parts thereof / 180,908 / 190,358 / 645,050
7 / '72 / Iron and steel / 736,754 / 561,910 / 611,415
8 / '10 / Cereals / 624,248 / 412,922 / 601,719
9 / '30 / Pharmaceutical products / 480,930 / 454,569 / 548,194
10 / '90 / Optical, photo, technical, medical, etc apparatus / 438,796 / 495,255 / 507,677
11 / '02 / Meat and edible meat offal / 475,489 / 441,027 / 478,059
12 / '94 / Furniture, lighting, signs, prefabricated buildings / 385,294 / 424,175 / 466,198
13 / '39 / Plastics and articles thereof / 362,582 / 365,713 / 442,172
14 / '61 / Articles of apparel, accessories, knit or crochet / 262,805 / 317,159 / 357,122
15 / '62 / Articles of apparel, accessories, not knit or crochet / 263,158 / 293,676 / 335,165
16 / '04 / Dairy products, eggs, honey, edible animal product nes / 287,714 / 255,624 / 312,508
17 / '29 / Organic chemicals / 210,524 / 105,180 / 244,291
18 / '48 / Paper and paperboard, articles of pulp, paper and board / 229,533 / 192,989 / 215,874
19 / '40 / Rubber and articles thereof / 306,810 / 246,144 / 214,532
20 / '08 / Edible fruit, nuts, peel of citrus fruit, melons / 184,695 / 174,075 / 208,543

Source: Trademap

Trade with Pakistan

Pakistan imports petroleum products from Kuwait worth USD 2.8 billion (approx.) annually. In return, Pakistan’s exports rice, foodstuff, textile, leather products, electrical machinery, tent, fish & fish preparations, fresh fruits and vegetables. Kuwait is a potential export market for Pakistan. We can further increase our exports of rice, textile products, Engineering goods, Leather clothing, Sportswear, Fruits, Footwear, pharmaceutical and sports goods. Pakistan has an adverse balance of trade with Kuwait mainly on account of oil imports.

Top 20 Exports to Kuwait from Pakistan

US$ Thousand

S. No. / Product code / Product label / Value in 2011 / Value in 2012 / Value in 2013
TOTAL / All products / 90619 / 82641 / 96202
1 / '02 / Meat and edible meat offal / 15344 / 19306 / 21112
2 / '63 / Other made textile articles, sets, worn clothing etc / 12582 / 13930 / 15213
3 / '03 / Fish, crustaceans, molluscs, aquatic invertebrates nes / 9198 / 8762 / 13078
4 / '10 / Cereals / 15560 / 8894 / 10405
5 / '52 / Cotton / 3880 / 4299 / 4757
6 / '08 / Edible fruit, nuts, peel of citrus fruit, melons / 3471 / 1786 / 3579
7 / '12 / Oil seed, oleagic fruits, grain, seed, fruit, etc, nes / 1345 / 2553 / 3427
8 / '42 / Articles of leather, animal gut, harness, travel goods / 1714 / 3462 / 2900
9 / '84 / Machinery, nuclear reactors, boilers, etc / 2521 / 4631 / 2773
10 / '55 / Manmade staple fibres / 3412 / 2571 / 2084
11 / '59 / Impregnated, coated or laminated textile fabric / 1146 / 1008 / 1917
12 / '07 / Edible vegetables and certain roots and tubers / 943 / 834 / 1810
13 / '17 / Sugars and sugar confectionery / 49 / 103 / 1547
14 / '62 / Articles of apparel, accessories, not knit or crochet / 1846 / 1129 / 1261
15 / '87 / Vehicles other than railway, tramway / 256 / 101 / 1159
16 / '61 / Articles of apparel, accessories, knit or crochet / 1401 / 1280 / 1071
17 / '09 / Coffee, tea, mate and spices / 702 / 912 / 654
18 / '64 / Footwear, gaiters and the like, parts thereof / 1446 / 775 / 567
19 / '23 / Residues, wastes of food industry, animal fodder / 37 / 37 / 520
20 / '94 / Furniture, lighting, signs, prefabricated buildings / 154 / 390 / 510

Source: Trademap

Kuwait’s imports of above items from World

US$ Thousand

S. No. / Product code / Product label / Value in 2011 / Value in 2012 / Value in 2013
TOTAL / All products / 20080224 / 20071705 / 22258249
1 / '02 / Meat and edible meat offal / 475489 / 441027 / 478059
2 / '63 / Other made textile articles, sets, worn clothing etc / 79973 / 85640 / 98696
3 / '03 / Fish, crustaceans, molluscs, aquatic invertebrates nes / 79513 / 75702 / 76863
4 / '10 / Cereals / 624248 / 412922 / 601719
5 / '52 / Cotton / 17250 / 18829 / 20040
6 / '08 / Edible fruit, nuts, peel of citrus fruit, melons / 184695 / 174075 / 208543
7 / '12 / Oil seed, oleagic fruits, grain, seed, fruit, etc, nes / 37377 / 33583 / 52094
8 / '42 / Articles of leather, animal gut, harness, travel goods / 86844 / 105081 / 139336
9 / '84 / Machinery, nuclear reactors, boilers, etc / 2468593 / 2677158 / 2399642
10 / '55 / Manmade staple fibres / 63885 / 77452 / 66423
11 / '59 / Impregnated, coated or laminated textile fabric / 13958 / 15353 / 18442
12 / '07 / Edible vegetables and certain roots and tubers / 138639 / 140889 / 192744
13 / '17 / Sugars and sugar confectionery / 88460 / 93158 / 89299
14 / '62 / Articles of apparel, accessories, not knit or crochet / 263158 / 293676 / 335165
15 / '87 / Vehicles other than railway, tramway / 3525711 / 4540238 / 4904159
16 / '61 / Articles of apparel, accessories, knit or crochet / 262805 / 317159 / 357122
17 / '09 / Coffee, tea, mate and spices / 87008 / 78196 / 47414
18 / '64 / Footwear, gaiters and the like, parts thereof / 78669 / 84458 / 109316
19 / '23 / Residues, wastes of food industry, animal fodder / 45461 / 42082 / 46405
20 / '94 / Furniture, lighting, signs, prefabricated buildings / 385294 / 424175 / 466198

Source: Trademap

It is obvious from above table that, top 20 products from Pakistan (existing list) to Kuwait still have potential to grab bigger market share.

Top 20 Exports by India to Kuwait

US$ Thousand

S. No. / Product code / Product label / Value in 2011 / Value in 2012 / Value in 2013
TOTAL / All products / 1356927 / 1043425 / 1159054
1 / '10 / Cereals / 331835 / 206910 / 281295
2 / '84 / Machinery, nuclear reactors, boilers, etc / 257711 / 74575 / 89455
3 / '85 / Electrical, electronic equipment / 64601 / 73059 / 87520
4 / '02 / Meat and edible meat offal / 61607 / 59873 / 75474
5 / '73 / Articles of iron or steel / 154348 / 71380 / 50508
6 / '62 / Articles of apparel, accessories, not knit or crochet / 38681 / 41539 / 39596
7 / '61 / Articles of apparel, accessories, knit or crochet / 25931 / 33544 / 39017
8 / '87 / Vehicles other than railway, tramway / 17821 / 82816 / 36837
9 / '03 / Fish, crustaceans, molluscs, aquatic invertebrates nes / 28944 / 32944 / 35572
10 / '07 / Edible vegetables and certain roots and tubers / 16725 / 17513 / 27565
11 / '23 / Residues, wastes of food industry, animal fodder / 30373 / 28091 / 27435
12 / '72 / Iron and steel / 25561 / 28472 / 27064
13 / '08 / Edible fruit, nuts, peel of citrus fruit, melons / 26733 / 23044 / 26656
14 / '09 / Coffee, tea, mate and spices / 27636 / 29409 / 26534
15 / '39 / Plastics and articles thereof / 13613 / 19179 / 24387
16 / '33 / Essential oils, perfumes, cosmetics, toileteries / 5351 / 4758 / 17387
17 / '17 / Sugars and sugar confectionery / 9989 / 11148 / 16725
18 / '25 / Salt, sulphur, earth, stone, plaster, lime and cement / 20737 / 16692 / 16710
19 / '29 / Organic chemicals / 33505 / 5316 / 13366
20 / '27 / Mineral fuels, oils, distillation products, etc / 5524 / 13260 / 11767

Source: Trademap

It is clear from above table that India is one of the biggest competitors to our products. Specially, in rice, Kuwait market is dominated by Indian Rice due to demand by the consumer. Further, there is around 0.75 million Indian Diaspora in Kuwait with strong business community and established partnerships with Kuwaitis. The businessmen are marketing Indian products under their brands. Besides, there are hyper markets like, Lu Lu, Gulf Mart, Honest Center totally owned by Indian. These are also effective tool of Indian products.

Reasons for decline in Imports from Pakistan have already been elaborated time and again which include

  1. Lack of consistency in quality control
  2. Lack of interest by bigger manufacturer, due to size of Kuwait market in terms of population
  3. Lack of B2B interactions
  4. Negative media perception about Pakistan
  5. Energy Crisis in Pakistan – Exporters are unable to meet orders on time.
  6. Sub-standard packing of products to control cost.
  7. Lack of marketing of branded items from Pakistan in Kuwait
  8. Lengthy process to resolve trade disputes
  9. No trade delegation due to visa restrictions
  10. Lack of co-operation between Chambers of Commerce & Industry

Potential products to increase Trade:

We can increase trade volume by focusing on the following products.

  1. Rice
  2. Textile
  3. Engineering Goods
  4. Leather products
  5. Footwear
  6. Fruits & Vegetables
  7. Pharmaceuticals
  8. Sports Goods / Sports wears
  9. Sea Food
  10. Construction material
  11. Software

Role of Pakistani Community:

Pakistani business community can play vital role in enhancing bilateral trade between Pakistan and Kuwait. Community may form a hyper market with a focus to market Pakistani products under their own brands beside goods from other origin. It should also make sure that Pakistani products are displayed at Co-operative Societies in Kuwait. There are more than 50 Central Co-operative Societies with small branches which provide more than 200 outlets to market products.

CONCLUSION

So far, there happens to be only two major reasons for Pakistan's disappointing trade figures (Pak exports) with Kuwait: Either the trade doesn't have access to interact / have B-B meetings due to visa restrictions Or those who, somehow, got the access, they tarnished the image of Pakistan with such unfair display and mis-declarations. The above analysis clearly reflects that Kuwait market has much to offer to Pakistani exports if constant interaction between the two trade communities is established and business deals are struck following the best business practices.